The Fintech Times - Special Edition "Asia's Digital Ecosystem"

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Transforming banking and increasing financial inclusion through e-KYC


Delivering better finance for all

Digital payments: The key to sustainable growth

Turning compliance into business

What’s the true cost of fraud to your online business?

Reinventing the foundations of Asia’s banks


After nine months of online-only events, the Singapore Fintech Festival (SFF) is raising the bar with 40 global satellite events taking place across the world as part of the Singapore Fintech Festival x Singapore Week of Innovation and Technology (SWITCH) 2020. Events will take place throughout 7 to 11 December. This unique hybrid format will combine a 24-hour online event platform with global satellite events around the world, but there’s no need to stay up around the clock, events will be held according to the local time zone. This approach is expected to provide participants with greater access to the global fintech and deep tech communities who are looking to discover partnerships, draw investments and boost sales cycles. Physical events include Shift Money, based in Zagreb, Croatia and World Fintech Festival, which has live events from Cambodia to Dubai alongside other hyperlocal sessions across the world. In terms of the online schedule, there will be five main summits with events each day covering topics such as economy, infrastructure, impact, investing and talent. Expect panel discussions plus fireside chats with speakers, such as Zoom founder Eric Yuan, incoming Citigroup

CEO Jane Fraser plus Ethereum co-founder Vitalik Buterin and rapper Akon. Other well-known participants include: 1 Nobel laureate 20 Technology leaders 20 Eminent academicians 50 Global influencers 50+ Policy makers 60 Financial industry leaders 60 Global investors 100+ Founders 110+ Fintech influencers Worried about missing the highlights? According to the organisers, 10 of the top sessions will be broadcast for free on platforms, such as Facebook Live and YouTube. These include interviews with Microsoft CEO Satya Nadella, Google CEO Sundar Pichai and 2019 Nobel Prize winner for Economics, Abhijit Banerjee. For those attending, whether in person or online, a digital map will

show all of the SFF x SWITCH activities across Singapore, with dedicated zones for various activities, including an international zone, early-stage and growth-stage fintech zones, talent zone, technology showcase zones and a networking zone. Participants will be able to visit locations on the map via a searchable and interactive directory of organisations and activities, tailored to their interests and profiles. And, if you’re interested in networking, participants can meet and network with attendees on the event platform and schedule one-on-one meetings, by leveraging on the platform’s business matching functionality. Despite the challenges of 2020, hosts of the SFF – the Monetary Authority of Singapore (MAS) – wanted to change the perception that events of this year have either been postponed

or moved entirely online. Here Damien Pang, deputy chief fintech officer at MAS, explains why it decided to pull off such a game-changing conference. What were the main reasons behind moving to a 24-hour schedule? While the pandemic has presented challenges to international travel and physical gatherings, we saw this as an opportunity to pivot and for SFF x SWITCH to become truly global – allowing us to reach the global fintech community across time zones. This year, we will not be able to have all speakers and attendees in a single location in Singapore so our global fintech community will be participating from their own countries all around the world. As such, it would make sense not to confine the activities within a single time zone, whether it is to share thought leadership, network or conduct cross-border business activities. 



How difficult has it been to organise with so many time zones involved? The experience of running 24-hour, five-day content definitely comes with its own


EVENTS WE THINK YOU SHOULD ATTEND! 07 Dec: 02:50 - 03:45 How Will the Financial Services Sector Respond in 2021 (Episode 2) Bill Winters, Group CEO, Standard Chartered PLC Piyush Gupta, CEO, DBS Group Dinesh Khara, Chairman, State Bank of India Calvin Choi, Chairman of the Board, AMTD Group Moderator: Haslinda Amin, Chief International Correspondent, Southeast Asia, Bloomberg Television 07 Dec: 14:20 - 15:00 How Will the Financial Services Sector Respond in 2021 (Episode 4) Su Shan Tan, Group Head of Institutional Banking, DBS David Marcus, Head of F2 (Facebook Financial), Facebook Moderator: Rebecca Martin, Senior Executive, Monetary Authority of Singapore 07 Dec: 15:00 - 15:50 A Reset for 2021. Trade-offs & Strategic Decisions for the Leading FinTechs (Episode 1) Simon Loong, Founder and Group CEO, WeLab Cristina Alba Ochoa, Chief Financial Officer, OakNorth Bank Samir Subberwal, Regional Head, Retail Banking, Greater China & North Asia, Standard Chartered Bank (Hong Kong) Ltd. TS Anil, Group Chief Executive Officer, Monzo Bank Moderator: Aman Narain, Global New Payments Ecosystems Lead, Google


unique set of challenges. However, we are working with a network of supportive global partners to host the global satellite events which will bring together content from innovation hubs and tech showcases from around the world. SingEx Group, together with MAS and Enterprise Singapore, will manage the physical and digital experiences for attendees and ensure a seamless execution of the fintech and innovation showcases across the cities. These experiences will also be stitched together in an online 07 Dec: 17:00 - 17:40 Digital and Cultural Transformation in a Co-Covid World: The Successes and Failures Matthias Kroener, Founder and Former CEO, Fidor Bank Nigel Verdon, Co-founder and CEO, Railsbank Sheel Mohnot, Founder, Better Tomorrow Ventures Moderator: Drew Graham, Director, Digital Strategy, Barclays 07 Dec: 20:35 - 21:10 The Impact of the Pandemic on Operational Resilience, Market Infrastructures and Cybersecurity Heath Tarbert, Chairman and Chief Executive, Commodity Futures Trading Commission Moderator: Jo Ann Barefoot, Chief Executive Officer and Co-Founder, AIR – the Alliance for Innovative Regulation 07 Dec: 23:00 - 23:50 Embedded Finance: The Hard Truths! Arthur Lang, Chief Executive Officer International, Singtel Bill Borden, Corporate Vice President, Worldwide Financi al Services, Microsoft Aung Kyaw Moe, Founder and Group CEO, 2C2P Moderator: Jinesh Patel, Partner, Integra Partners


event platform featuring a digital city supported by partners, including Accenture, Microsoft and Pico Art International. What aspects of fintech have you decided to highlight this year? The overall theme of SFF x SWITCH this year is ‘People and Talent’, which will shine a spotlight on the trailblazing pioneers who have made a difference as well as rising stars with the potential to transform global industries. It will also honour individuals who have demonstrated remarkable resilience in overcoming obstacles to create new opportunities that have significantly advanced our society. One of the key focuses is the initiatives and community activities that drive talent development, reskilling and upskilling of the finance and tech workforce.

08 Dec: 02:35 Achieving Scale in Insurtech Arijit Chakraborty, MD, Asia, Cover Genius Tom Duncan, Head of Insurance, Grab Moderator: George Kesselman, President, InsurTech Asia Association 08 Dec: 04:30 Crypto Is the New Safe Haven: A Conversation with the Winklevoss Twins Speakers Cameron Winklevoss, President and Co-Founder, Gemini Trust Company, LLC Tyler Winklevoss, CEO and Co-Founder, Gemini Trust Company, LLC Moderator: Dante Disparte, Vice Chairman, Head of Policy and Communications, Libra Association

In addition, the SFF Global-Common Channel will feature five global summits on the themes of economics, infrastructure, impact, investor and talent. They will focus on driving cross-border commercial activity to support pandemic recovery and how financial institutions should position themselves in 2021. Are there any key recommendations for events you think our readers should attend? Attendees will be spoilt for choice with a rich content experience this year, featuring more than 800 speakers from around the world, speaking on live content broadcasts running round-the-clock and on-demand sessions. We encourage attendees to subscribe to our newsletter to receive the latest updates on 08 Dec: 07:10 The New AI Imperative: from Scientific Discovery to the Age of Implementation Dr Kai-Fu Lee, Chairman and CEO, Sinovation Ventures Moderator: Eu Imm Chan, Editor/Presenter, CNA, MCN International Pte Ltd 08 Dec: 16:10 Solving Cross-Border: The Roadmap to Connecting Faster Payment Dilip Asbe, MD and CEO, National Payments Corporation of India Lawrence Chan, CEO, Network for Electronic Transfers (NETS) Siritida Panomwon Na Ayudhya, Assistant Governor, Payment Systems Policy and Financial Technology Group, Bank of Thailand Moderators: Melvyn Low, Head, Global Transaction Banking, OCBC Dr Kai-Fu Lee, Chairman and CEO, Sinovation Ventures

speakers and sessions. The information can help attendees plan their week based on the recommended sessions and allow attendees to keep track of the topics that they are interested in. Look out for highlights on the Investor Summit, happening on 10 December, such as the MAS Fintech Awards and Global Fintech Hackcelerator, which will showcase innovative and groundbreaking fintech solutions that will enable the financial sector to respond to the pressing global challenges of today. Attendees can also look forward to Deal Fridays – the platform jointly organised by MAS and Enterprise Singapore for deal-making

08 Dec: 08:50 Building Open Ecosystems Henry Ma, Executive Vice President and Chief Information Officer, WeBank Janet Young, MD, Head Group Channels and Digitalisation, United Overseas Bank Ltd Joel Yarbrough, VP of Asia Pacific, Rapyd Liz Oakes, Executive VP, Strategy and Operations Excellence, Mastercard Moderator: James Lloyd, Asia-Pacific FinTech and Payments Leader, EY-Parthenon

opportunities – happening at the Investor Summit. Deal Fridays will consist of carefully curated and targeted investor/corporate-startup matchmaking sessions to maximise commercial success in forging investment deals, co-innovation opportunities and business partnerships. In addition, attendees who are interested to know more about the Singapore fintech ecosystem may want to tune in to the Singapore Hyper-Local channel – APIX Oxygen. We have curated discussion sessions on Singapore-specific initiatives, such as the API eXchange (APIX) platform, MAS’ regulatory sandbox, as well as grants and other initiatives. Attendees should also check out the Singapore pavilion (featuring more than 20 exhibitors), Business sans

Borders pavilion, Project Ubin pavilion, AI pavilion and Talent pavilion for information about some of MAS’ initiatives.

08 Dec: 11:30 The Power and Pitfalls of Fintech Partnerships Anna Marrs, President, Global Commercial Services, American Express Kathryn Petralia, President and Co-Founder, Kabbage, An AmericanExpress Company Moderator: Andrew B. Morris, Founder and CEO, The FintechAgenda LLC

09 Dec: 12:30 Driving Innovation: From Sustaining to Sustainability Speakers: Harit Talwar, Chairman of Consumer Business, Goldman Sachs Robin Vince, Vice Chair, BNY Mellon and CEO, Global Market Infrastructure, BNY Mellon Moderator: Leda Glyptis, Chairman of the Board, GeoPhy

09 Dec: 00:00 The Evolving Payments Ecosystem Alfred F.Kelly, Jr, Chairman and CEO, Visa Inc. Anthony Eisen, CEO and Managing Director, Afterpay Prajit Nanu, Co-Founder and CEO, NIUM Moderator: Melissa Guzy, Co-Founder and Managing Partner, Arbor Venture Management Company Pte. Ltd.

Do you see these hybrid events as the new future of fintech? The extraordinary challenges brought by the global pandemic have triggered a paradigm shift for SFF x SWITCH, giving us an opportunity to redefine our approach and explore an expanded and exciting new collaboration model. This new approach will allow us to creatively integrate global centres through an immersive digital engagement experience and also allow us to bring together the global innovation community in spite of the current constraints in travel and meetings. We believe this will set a precedent for how events are run in a post-Covid world.

09 Dec: 21:20 Public and Private Sector Responses to the Global Recovery in 2021 Jes Staley, Group Chief Executive, Barclays John Glen, Economic Secretary to the Treasury and City Minister, United Kingdom Mike Wells, Group Chief Executive, Prudential PLC Moderator: Manisha Tank, Radio Host and TV News Anchor MONEY FM 89.3, SPH Radio


What do you think the world can learn from the Singapore Fintech Festival? The Singapore Fintech Festival brings together the global financial, fintech and tech communities onto a single platform for knowledge sharing, exchange of ideas and networking opportunities. While we are unable to physically host all the participants in Singapore for this year’s Festival, we hope that our online Singapore city will give participants a glimpse of the vibrant fintech ecosystem that we have in Singapore – with over 1,000 fintech companies based here, and more than 40 innovation labs set up by global financial institutions to connect and pilot new solutions with fintechs here. 10 Dec: 18:00 The Covid Effect on Investments and Acquisitions Ben Davey, Chief Executive Officer, Barclays UK Ventures Matt Dill, Global Head, Strategic Partnerships and Venture, Visa Sumant Mandal, Managing Partner, March Capital Moderator: Jonathan Weiner, Venture Partner, OAK HC/FT 11 Dec: 00:10 SME Sector Recovery - Are Investors and Banks Doing Enough? Haryanto Suryonoto, SME Business Head, Danamon Bank Michael Lints, Partner, Golden Gate Ventures Nikhilesh Goel, Co-Founder and CEO, Validus Anthony Thomas, Chairman, Momo Moderator: Robert Tay, Cluster Director, Modern Services Cluster, Infocomm Media Development Authority







increasing to $760million, the bank has resumed its lending services in July 2020. Xiaomi-backed XWBank and MYbank achieved a return on equity (ROE) of 30.3 per cent and 28.2 per cent respectively in 2019, far outperforming other digital banks (Figure 2). When it comes to net profit per user, there is a huge gap between digital banks in China and the top performer ING Bank (Australia) (Figure 2). At the end of 2019, ING Bank (Australia) had 2.6 million customers, while XWBank had 31 million customers and WeBank served over 200million individual customers and 0.9 million small

Aggregate net profit of four digital banks in China more than doubled in FY2019 Fig 1. Net profit/loss of selected digital banks in Asia Pacific 600


Net Profit in FY2018* ($, Million)


Net Profit in FY2019* ($, Million)


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172 174

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116 60 68

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The aggregate net profit of the 13 digital banks in Asia Pacific assessed increased by 49 per cent to $1.66billion in the financial year 2019 from $1.12billion in the year before (Figure 1). This is largely driven by WeBank, MYbank, XWBank and aiBank in China. Among these 13 digital banks, Tencentbacked WeBank posted the highest net profit of $565million in 2019, followed by ING Bank (Australia) and Alibaba-backed MYbank. Both WeBank and MYbank reported a full-year net profit for the first time in 2016. WeBank saw its net profit increase by 261 per cent in 2017, 71 per cent in 2018 and 60 per cent in 2019. It has leveraged Tencent’s ecosystem, technology capabilities and research and development (R&D) resources, which enabled it to scale up

In addition to being more innovative, Kakaobank has also been more successful in tapping fresh sources of capital for their expansion. Kakaobank had a total paid-in capital of $1.6billion at the end of 2019, compared with KBank’s $447 million. KBank began suspending its loan services in April 2019 due to the shortage of capital. Telecommunications giant KT’s application to raise its stake in KBank was disapproved last year, as it has a history of violating fair trade regulations. In July 2020, BC Card, a subsidiary of KT, was approved to become KBank’s largest shareholder. With its total capital


Digital banks in APAC witnessed improving overall profitability in 2019 and prospect in 2020 remains optimistic despite Covid-19.

rapidly. In 2019, investment into technology R&D accounted for almost 10 per cent of its operating revenue, and about 60 per cent of its employees are on the technology side. Leveraging Alipay’s artificial intelligence, computing and risk management technologies, MYbank has cooperated with more than 400 financial institutions, serving 29 million small and micro businesses as of June 2020. The number of customers served went up by 70 per cent in 2019, and 80 per cent of its loan users had previously never received business loans from traditional banks. The bank’s net profit surged by 91 per cent in 2019 and its non-performing loan ratio remained stable at 1.3 per cent. On the contrary, net profit of South Korea’s Kakaobank and China’s aiBank was less than $5million in 2019, as both booked net profit for the first time in 2019. Launched in July 2017, Kakaobank posted a net profit of $11.8million in 2019 after booking a net loss of $97.5million in 2017 and $18.7million in 2018. It continued to outperform the country’s first internet-only bank KBank in terms of profitability. KBank saw its net loss widen from $18.9million in 2018 to $86million in 2019.

$, Million


Note: *FY2019 for digital banks in India and Japan: from April 1, 2019 to March 31, 2020; FY2018 for digital banks in India and Japan: from April 1, 2018 to March 31, 2019.

Source: Asian Banker Research

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ROE ROE (%)(%)


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Note: *FY2019 for digital banks in India and Japan: from April 1, 2019 to March 31, 2020; **MYbank serves small and micro businesses only. ***Paytm Payments Bank’s ROE is not available. Source: Asian Banker Research

and micro businesses. The digital banks that were launched in the past six years and have turned profitable either grew out of messaging platforms or are based in large consumer markets. WeBank took advantage of Mobile QQ and WeChat, the messaging apps operated by Tencent. Backed by South Korea’s leading messaging platform KakaoTalk, Kakaobank’s customer base has surpassed 12 million in March 2020, which is more than a fifth of the country’s entire population. India’s Paytm Payments Bank only earned $0.013 net profit per user in 2019. However, it is the first payments bank in India to turn a profit. It has proved that the segment can be profitable despite the limited revenue streams. Besides fees earned from transactions, they also invested in government securities. In aggregate, the seven payments banks in India recorded net losses of $90.6million in the financial year ended March 2019, according to Reserve Bank of India’s Report on Trend and Progress of Banking in India. Paytm Payments Bank started operations in May 2017, and it is the largest Payments Bank in

Net profit /user in FY2019* ($) Net profit /user

in FY2019* ($) ROE in FY2019* ROE in FY2019*


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IN IN G G Ba Ba nk nk (A (A us us SB SB t t I S I S S S raliaralia um um on on ) ) y ish ish B y B in in an an Da Da Ne Ne k k iw iw t B t B a N a N an an ex ex k k Ra Ra t Ba t Ba ku ku nk nk te te n n Ba Ba M M nk nk Yb Yb an an k* k* XW XW* * Ba Ba Jib Jib nk nk Ja Ja un un pa pa Ba Ba n n nk nk Ne Ne tB tB an an k k W W eB eB ka ka ank ank ka ka Pa Pa ob ob yt yt an an m m k k Pa Pa ym ym ai ai en en Ban Ban ts ts k k Ba Ba nk nk ** ** * *

NetNet profit profit ($ million) ($ million)

Fig140 2. Net profit per user and ROE of selected digital banks in Asia 35% Pacific

India in terms of deposits. The bank earned a net profit of $2.7million in the financial year ended March 2019 after booking a net loss of $3.2million in the year before. It had a market share of 19 per cent and 32 per cent respectively at the end of March 2019, in terms of mobile banking and Unified Payments Interface (UPI) transactions. The total number of UPI handles on Paytm Payments Bank platform reached 100million in February 2020, driven by Paytm’s All-in-One QR which accepts payments from all UPI-based platforms. In the financial year ended March 2020, its net profit went up by 55 per cent thanks to higher customer acquisition in smaller cities and towns. When comparing how long it took these digital banks to break even, it was determined that digital banks with five years or less in operations have managed to turn a profit in a shorter period. This can be partially attributed to the new technologies and growing demands. On average, it took them around two years to turn profitable, compared with over four years for the first generation of internet banks

that were introduced in Japan such as Japan Net Bank, Rakuten Bank and Sony Bank. By comparison, digital banks in Australia are not expected to become profitable within two years. In 2019, Australia’s new entrants like Judo Bank, Volt, Xinja and 86 400 secured the full authorised deposit-taking institution (ADI) licence and IN1Bank received a restricted ADI licence. Judo Bank became the first Australian challenger bank to reach the AU$1billion ($650million) valuation and attain unicorn status after it raised $148million in Series C funding round in May 2020. Although these digital banks are attracting more and more customers, profitability remains a challenge. Digital banks are better positioned to provide financial services to customers during this Covid-19 period thanks to their digital business model. In Japan and South Korea, digital banks have performed better than traditional banks in terms of net profit. In the first half of 2020, combined net profit of South Korean banks fell by 17.5 per cent as their allowance for loan loss reserves increased by 157 per cent. However, Kakaobank witnessed a 372 per cent surge in its net profit in the first half of 2020, driven by robust lending business and partnership with securities firms and credit card companies. In Japan, those six digital banks’ aggregate net profit went up by 8 per cent in the quarter ended June 30, 2020, while three largest banking group saw their combined net profit plunge 49 per cent. Chinese digital banks are expected to deliver weaker performance for 2020, as financial institutions have been pushed to sacrifice $212 billion (RMB 1.5 trillion) in profit this year to support companies by lowering

lending rates, cutting fees, deferring loan payments and granting more unsecured loans to small businesses. In the first half of 2020, combined net profit of Chinese banks declined by 9.4 per cent. XWbank recorded 14.5 per cent decline in its net profit in the first half of 2020. In addition to the requirements on limiting the profit, the bank also slowed down the expansion. At the end of June 2020, its assets and liabilities dropped by 9.2 per cent and 11.2 per cent respectively from the end of December 2019. It is expected that the profitability of digital banks in China will be better in 2021 as the economy gradually recovers.

TAB International Pte Ltd is an investor, owner and manager of world class digital content platforms namely The Asian Banker, Wealth and Society,, as well as learning platforms like The Banking Academy and The Skills Store. TAB is a research and intelligence company dedicated to providing complete and upto-date information on strategic developments in the financial services industry in the Asia Pacific Region, Middle East and Africa. We manage world class digital content & communities. Wendy Weng is a research data analyst at The Asian Banker. She has 10 years’ experience as a banking data scientist and has worked on numerous data-related research projects and thought leadership pieces. She holds a Master’s degree in Applied Finance from the Singapore Management University.



FINTECH EVOLUTION IN BANKING: THE VIRTUAL BANK With the rise of digitalisation, customers have come to expect more from financial services by Henry Ma As customer preferences in banking shift towards on-demand, contextualised services, many financial institutions are now having to adapt. However, flexible operations and quick-to-market delivery is proving a challenge for incumbents who must first transform from years of outdated technologies and paper-based operations to a modern banking stack. Amid this change, fully digital banks have emerged in an attempt to win digitally savvy customers with a strong technical back-end and sleek user interface. These digital banks or ‘virtual banks’ are most typically defined as licensed banking institutions that use online or electronic channels instead of physical branches as their primary servicing channel. They not only appeal to many mobile-first customers, but also to regulators who increasingly look to position their respective geographies as leaders in the future digital economy. Following the successes of China’s and South Korea’s digital banks, the Hong Kong Monetary Authority (HKMA) took matters one step further by issuing eight new virtual bank licences under a distinct regulatory scheme in 2019. The Monetary Authority of Singapore (MAS) and Bank Negara Malaysia


are now following suit with their own unique virtual banking frameworks. Virtual banking is accelerating the competitive dynamic in Asia. These initiatives all centre around creating newly licensed businesses – unburdened by legacy infrastructure – that encourage technological and business innovation to foster greater competition. The expectation is that this will allow more diverse and accessible financial services to flourish, especially for mass market, long-tail individuals and small- and medium-sized businesses (SMEs), who have traditionally been underbanked. Achieving this outcome remains far from certain, however. Removing the branch network can reduce certain costs, but substantial costs remain in operations, maintenance, compliance and technology acquisition. Furthermore, the lack of a physical outlet and the offering of round-the-clock services means reliability of services is paramount to building trust with customers. Instead, virtual banks must show a path to sustainability that profits from higher-volume, smaller ticket-sized transactions. To achieve this the bank must exhibit in its technology stack what is referred to as the ‘four highs and two lows’ – high


performance, high elasticity, high availability, high uniformity, low cost and low risk. In China, WeBank is known for its fully digitalised system across infrastructure, procedures and products. It has applied artificial intelligence, blockchain, cloud computing and data technologies to a great extent in its day-to-day business operations. For instance, a fully straight-through processing framework has been built upon a big data architecture to reduce risks, such as credit underwriting, fraud detection and anti-money laundering detection, and improve services, such as recommendation and personalisation of products. Data-driven operations also support a more objective view on product development as well. Agile development, which encourages frequent and sometimes irregular product updates and releases, allows product owners to review usage and performance indicators to inform decisions made within each short, iterative cycle. This ensures products develop in the direction of what customers want. Likewise, it reduces the expense of any new ideas which may prove less successful. Underpinning all of this is an elastic infrastructure that meets the reliability standards

required by financial services. Cloud computing or distributed infrastructures deployed on-premise can now easily allow new products to be released to only a small portion of customers and then scale the service as the product matures. This type of infrastructure is similarly capable of so-called ‘A/B testing’, which involves using multiple product versions across different customers at the same time to identify which version is more effective. This combination of iterative improvement and new infrastructure are what allow virtual banks to adapt so quickly and efficiently while keeping services available to customers 24 hours a day. Moving forward, it seems almost certain that more countries will release policies supporting the creation of new virtual banks. While virtual banks tend to be born out of unique partnerships between both banks and non-bank institutions alike, they all share an aspiration to apply new technologies and alternative data to create seamless, context-based financial services. With financial services becoming ever more intuitive and accessible, the result likely spells better finance for all.


Increasingly, we see financial institutions tackling the challenge of financial inclusion by adopting electronic know-your-customer (e-KYC) technology to help them meet complex compliance requirements, especially in the areas of anti-money laundering (AML) and counter-terrorist financing (CTF). This is as they endeavour to keep the customer onboarding experience as pain free and efficient as possible. The technology has already been shown to significantly reduce the burden of authenticating customer identities. In India, for example, the use of the Aadhaar digital ID for e-KYC was estimated to cut onboarding costs for financial institutions from about $5 to just $0.70 per customer, according to a report by the consultancy McKinsey. The World Bank estimates that more than 1.7 billion individuals are currently financially excluded, with nearly one in five attributing the situation to a lack of necessary identification documents. For these countries, there are clear benefits of e-KYC, where illiteracy rates are high and people living in remote areas have difficulties accessing financial services. Bangladesh is a prime example of an emerging market that has seen growing benefits from adopting e-KYC. Although some 70 per cent of its population lives in rural areas,

about half of the country’s adults own a bank or mobile money account thanks to the growing adoption of mobile banking, according to the World Bank’s Global Financial Inclusion Index. In July last year, Bangladesh’s largest mobile financial service provider bKash, a local e-wallet partner of Alipay, introduced an e-KYC function to its mobile banking app, allowing customers to open a bKash bank account by themselves – simply

especially as increasingly sophisticated criminals leverage technology to steal from companies and customers. According to KPMG’s Global Banking Fraud Survey, 61 per cent of banks have reported an increase in external fraud by both value and volume over the past three years. It can also help reduce the number of in-person checks and manual exchanges, an example highlighted by bKash. This minimises the potential errors and enhances the allocation of resources to other customer

by scanning their national identity card and taking a photo. Thanks to the simplicity of e-KYC, customers do not need sophisticated technology skills, nor are they required to visit physical branches to fill out forms, benefiting illiterate individuals. This would help put Bangladesh closer to its goal of total financial inclusion by 2024. While e-KYC helps facilitate the acceleration of digital financial inclusion in many markets, it can also be applied to solve other challenges faced by financial institutions globally. For example, the technology can protect banks by detecting identity fraud and monitoring transactions and portfolios,

experience enhancing activities. Such a focus on efficiency is important as financial institutions around the world face higher need for resources and growing costs to satisfy regulatory requirements, such as combating money laundering and terrorist financing activities. For them, the impact of non-compliance can be significant. According to industry research, some $26billion in fines were imposed on financial institutions in the decade since 2008. Furthermore, about a third of financial institutions admitted their biggest challenge is the lack of resources in conducting KYC and customer due diligence

Dr. Jidong Chen, General Manager of ZOLOZ, an Ant Financial company

processes, a study by analytics firm Refinitiv showed. Thus, the benefits of adopting e-KYC by financial institutions are clear from a commercial and regulatory standpoint. Current technology allows us to build e-KYC platforms with three core advantages: 1) financialgrade facial recognition, 2) proprietary ID identification and anti-counterfeiting, and 3) multi risk signal-based security control systems using a real-time ID network. Compared with traditional processes, such a platform provides financial institutions with an automated self-service process with ID, face-capturing and liveness detection features. Information provided by a customer can then be verified against data sources from the authorities, saving significant amounts of time. Based on our observations in Indonesia, nearly half of the customers on an e-KYC platform could have their services successfully processed within three minutes, compared with a typical waiting time of at least two hours through systems that required manual review. The benefits of adopting e-KYC in developed countries are already clear from a commercial and regulatory standpoint. Given what we are now seeing in emerging markets, the positive impact, especially in the critical issue of promoting financial inclusion, is set to be much more far-reaching and momentous.




Bob Blower, CEO of Clarency, discusses the importance of genuine partnerships as he gears up for the upcoming launch of due diligence platform biz.Clarency

Despite huge investments in compliance by financial organisations, regulators imposed bigger fines for anti-money laundering failures in the first half of this year than they did in the whole of 2019. Customer due diligence is the most frequently punished failing, with 115 significant cases reported since 2015, according to consultancy Duff & Phelps. One of the highest-profile enforcement actions in 2020 involved the London branch of German lender Commerzbank. In June, the UK’s financial regulator, the Financial Conduct Authority, fined Commerzbank £38million for money-laundering failures, including an ‘out-of-control’ system for checking clients. This was the second-largest fine ever imposed by


the British regulator for deficiencies in preventing potentially illegal transactions. At the end of this year, the curtains will be drawn back on biz.Clarency, a new cloud-enabled platform with a mission to turn compliance, payments and successful international trade into a click-and-go process. The result of two years’ development, the platform represents a fresh approach to enabling compliant, rapid and costeffective international trade. The flagship product of financial services firm Clarency – recently acquired by the Choice International Group – the integrated platform delivers next-generation anti-money laundering and know-your-customer tools to enable banks to service their clients better, overcome risk and create opportunity. According to Clarency, cross-border trade is too complex, too slow and too expensive. Regulators and law enforcement agencies are being drowned in reams of virtual paper and banks are becoming even more risk-averse, increasing


derisking activities and isolating more and more regions and industries. Given the inadequacy of the current tools, many banks have felt forced to withdraw payment services from regions they regard as high risk. “Penalties for noncompliance are as much an indictment of regulators that outsource the policing to the financial sector as the banking industry,” says Bob Blower, CEO of Clarency. “The culture is to tick a few boxes rather than to look at the risk and make a proper judgement. “Sixteen years of supporting and evolving the due diligence of an international payments organisation has taught us a lot of lessons about what's required for due diligence to do what it's intended for: to prevent financial crime, not simply to shift blame. We’re working from a profound knowledge base of how international trade works.” biz.Clarency is designed to free up bank time by involving the customer in

To make biz.Clarency a reality, Clarency has developed close ties with market leaders and technology innovators the information gathering process, and by automatically pre-screening customers, counterparties and transactions to reduce risk officers’ workload. The single-login enabler for compliance, multi-currency


payments and information sharing ensures provable compliance with an immutable audit trail by means of an enhanced and revolutionary blockchain technique. Information sharing is facilitated via ISO 20022-compliant XML and SWIFT integration. Integration with popular accounting systems, such as Sage, Xero and QuickBooks for

SMEs, or ERP systems for your larger clients, allows biz.Clarency to reconcile each transaction with accounts entries and payments. If anything moves outside your set criteria, risk officers are automatically alerted. Costs are vastly reduced by automatic deep searches of parties’ background, bringing time-to-revenue down from weeks to days or even hours. End customers receive a faster, easier user experience while feeling more involved, and the bank is moved to centre-stage in their everyday business.

“We’re applying betterthan-bank diligence to every party and every transaction, facilitating rapid, hard currency payments at sensible rates, and creating system wide transparency that aids the good guys and freezes out the bad,” adds Blower. To make biz.Clarency a reality, Clarency has developed close ties with market leaders and technology innovators, including China Systems, the world-leading trade services solutions vendor, and distributed blockchain company InterlockLedger. It has also recently unveiled a new partnership with Eqibank, the Dominican digital bank that champions financial freedom in a more connected banking world and specialises in supporting trade of physical goods between emerging regions and the established world. “Our underlying business model has always been based on sound partnerships, although partnership has to be one of the misused business terms in the world today,” says Blower. “It annoys me that people claim partnership when what they’re really talking about is a supplier/customer relationship. It devalues genuine partnerships, which are the fundamental base of our entire business. “biz.Clarency would not have been possible without hands-on involvement of partners who have already established leadership, such as China Systems and InterlockLedger. These are people who’ve rolled up their sleeves to play an active role

in the development cycle. But we should also recognise the small, visionary companies like The Little Coding Company, who’ve enabled specialist functions like direct interfacing with customers’ accounting systems and bank accounts. “By combining resources, technologies and vision, our partnership with Eqibank frees up access to world trade for those countries that have been financially marginalised by bank derisking. We’re applying better-than-bank diligence to every party and every transaction, facilitating rapid, hard-currency payments at sensible rates, and creating system-wide transparency that aids the good guys and freezes out the bad. It’s not an aim, it’s what we’re doing – right now.” Clarency plans to officially launch biz.Clarency at a virtual event on 29 December, and will go live with a soon-to-be-revealed core of banking organisations.

About Clarency Clarency is a major payments enterprise based in Singapore. It was acquired in 2020 by the Choice International Group, which has operated strongly in global trade finance, foreign exchange and international remittances since 2004. The acquisition of Clarency and the launch of the biz.Clarency platform sees the group moving forward as a fully-fledged fintech. Websites: LinkedIn: company/clarency-com





New countries and new regions are implementing technology in this century, and leapfrogging Europe and America. Digitalisation demands a completely different business model from financial institutions but business leaders need to understand how to make the change if they are to thrive in this financial and technological revolution, writes Chris Skinner I talk a lot about how North America and Europe are legacy economies. Asia, Africa and South America are internet economies. The difference is clear and stark. The US and Europe evolved from the Industrial Revolution of the 19th century with railroads, electricity, water and telephones. They then had further revolutions as the automobile and televisual media of the 20th century took over. All of this powered by electricity. Then the computer age began after the Second World War and the US led this revolution with IBM as its poster child. Banks, airlines, manufacturers and retailers all committed to the technologies of IBM and its brethren in the 1960s and, by the end of the 20th century, they had built a huge technical legacy. Rarely upgrading or replacing core systems, the US and European economies were built upon and run upon technologies that had layer over layer of infrastructure added but rarely replaced. This is a core issue today, as it means the economies of these countries are severely constrained by technology legacy.


Other economies had businesses with similar constraints, but such companies were limited in power. Then, as the 21st century began, these economies unleashed growth and change of a nature that was new and fresh and built for the internet. China is an obvious example of an economy built for the internet age. It is a country that is almost cashless in most major cities and connected globally through digital structures. It is why India has seen unprecedented change, especially in recent years, to create the ‘unified stack’ and to give everyone access. India has moved from 35 per cent of citizens banked in 2010 to more than 80 per cent in 2020. It is why African nations have seen financial inclusion through the mobile network with a revolution in most countries during the last decade through digital reach. It is why 2.5 billion people were unbanked in 2010 and now there’s less than 1.5 billion people, according to the World Bank. What this demonstrates is that the countries who are smart and digital will see far


About Chris Skinner Chris Skinner is a globally known keynote speaker on the future of finance and technology, and the CEO of The Finanser Ltd.

more expansion in the next decade than the countries that are dumb and industrial. This will see a shift of balance of power from America to Asia, and that shift has been happening for almost a quarter of a century and will continue. In that shift, we are seeing many new models of finance emerging. As mention, the unbanked are getting banked and those who were excluded are now included. This is creating new ways of doing many things, from being able to pay with a QR code to creating digital identities using mobile technologies and biometrics. All of these new things are creating cheap financial networks using technology

platforms that can transact a $1 transaction for the same cost as a $1million transaction. In all of this, however, the idea of banks being destroyed by technology is not the case. Banks have been built over centuries as trusted intermediaries of value. They act as a trusted transactor between people and businesses that have no trust, and they act as a trusted store for holding value for the long term. They are an integral part of economic infrastructure and government, and will survive and thrive throughout the next centuries as that core part of how our world runs. The issue banks have is that most of them, including those in Asia, were built for the industrial era as distributors of paper in a localised network of buildings and humans. Banks now need to redefine their business models to become distributors of data in a globalised network of software and servers. That is a tough call, but many are making that call. I recently spent time talking to banks that are doing just that – from JPMorgan Chase in the US to ING and BBVA in Europe to DBS and China Merchants Bank in

Asia. The consensus among all of the banks is that if they don’t transform, they will die. Through our talks we have identified more than 30 key steps that are being taken to transform and these generally fall into four big buckets. The key is working out what to do, how to do it, doing it and then doing it better forever. Those first steps are the most difficult. As Charles Darwin is frequently quoted: the key to survival is not being the fittest, fastest or strongest, but being the most adaptable to change. But what to change and how to change is the hardest thing to get right. If you change in the wrong way or in the wrong direction, then you don’t survive. How banks are changing to be digital is that hardest part. As one bank’s chief financial officer said to me, the previous CEO and chair knew the bank had to change, but they couldn’t work out what to change and how. Therefore, this is the most critical aspect of digital transformation: working out what to change and how to change in the right way. Of the banks I met, they all seemed to take the same track to work out the what and how to change. They would spend a year or two visiting with companies that they recognised as successful digital firms. They would visit with the likes of Amazon, Google, Alibaba and Tencent. They would meet with Netflix, Spotify, TikTok and Ping An. They would find out how these companies organise and

structure, how they do things and how they manage. Then, after that exploratory period of working out what to do by visiting the companies that they think are doing digital well, the banks would internalise that and identify the ways in which they could bring those external learnings into their own business model and structure. That would give them the how to do it, which would then lead to doing it, as in implementing the ideas

So, what is digital transformation in banking and what are these banks doing to transform? and changes needed. The implementation takes time and often things go wrong or ideas need tweaking. This leads to the final phase which is when you have your house in order, you’ve made the changes and you’ve implemented the ideas, you don’t stop. You keep changing. Change is the only constant. That’s why you need to keep doing it better forever.

Working out what to change and how to change takes two or three years; implementing the change takes another two or three years; and doing it better keeps going forever. In other words, a bank’s digital transformation programme takes at least five years to get to that last phase of continuous improvement. This is where the ticking time bomb of digital transformation really sits today. The banks that

are already five years or more into their digital transformation programme are five years ahead of the banks that are just starting. This means that in a few years from now, we will see large-scale mergers and acquisitions of banks that are failing, because they started too late, with banks

and technology firms that are years ahead of the game. By the end of the 2020s, I fully expect to see two key things emerging. Banks will still be here doing banking, but they will do it digitally and other players may also be offering banking services, from telecommunications firms to internet giants to visionary fintech firms. The second is that there will be a whole raft of new financial services that look nothing like banking emerging from markets that previously did not serve citizens because it was uneconomic to do so. These new markets and new services will range from financial inclusion to financial wellness to financial support services. And a massive range of new companies and new businesses will have emerged to serve these areas digitally. These are exciting times indeed. In the meantime, the hardest thing any industrial era firm is facing is how to do digital well. I would suggest you buy my new book, Doing Digital: Lessons from Leaders, to find out how.



SMEs AND ENTREPRENEURS ARE FINALLY BEING FINANCIALLY INCLUDED, BUT WHY HAS IT TAKEN SO LONG? When people see the term financial inclusion they often think it only refers to individuals that are unbanked. But if you look at The World Bank definition, financial inclusion means that individuals and businesses have access to useful and affordable services that meet their needs. Businesses can too be financially excluded but the tides are changing. Small businesses globally represent about 90 per cent of commerce and more than 50 per cent of employment worldwide. SMEs also account for more than 55 per cent of gross domestic product (GDP) in developed countries. But access to finance and financial products has been an issue for SMEs. So, we need to ask why has it taken so long for these businesses to become financially included? Catering to the financially excluded is even more important with the current situation. The impact of Covid-19 on small businesses has been immense all over the world. A study by the Hong Kong Chamber of Commerce, found that nearly half of SMEs could only stay afloat for up to six months without government support. Losing small businesses, would have a knock


By David Rosa, CEO & Co-founder of Neat on effect to the world economy and to general employment that would be hugely detrimental. But what does financial exclusion look like for a small business? It comes back to the initial description by The World Bank of not having access to useful and affordable services. Traditionally, small businesses have been seen as far riskier than consumers, so obtaining basic banking services, let alone credit, can be extremely difficult and having a product offering that meets their needs and is economical is also a struggle. For a long time, the only option for SMEs were the incumbents. But small businesses have been traditionally underserved by financial services. We see this globally not just in Hong Kong or in the UK. Especially when it comes to moving money around the world.


For conventional banks, serving a large proportion of SMEs isn’t profitable. They aren’t willing to invest in providing the right products and services for SMEs. The product offering needed by SMEs is different to the everyday consumer and is different to large corporates. SMEs need greater control over tracking their expenses and managing their cash flow. In the UK, the average SME is owed £80,000 in late payments. It is therefore even more crucial for a small business to get paid on time. If not, it can lead to big impacts on their cash flow. As an owner of a small business you’re always short on time. The last thing you want is to be chasing payments. We are, however, now seeing huge strides within the fintech community to better serve SMEs and sole traders. It has taken fintechs to enter the market, to finally address the needs of small businesses and develop products that cater to them. These fintechs address a wide spectrum of financial services so that SMEs can essentially mix and match and pick what works for them. If we take Neat as an example, our mission is to help our customers grow their business

internationally. As a result, we look to make it easier for SMEs to send and receive funds across borders. We give small businesses the possibility to use Xero which integrates with our dashboard and helps them reconcile their payments and match these with their books. And we also equip them with corporate cards to help manage expenses much more easily. Other fintechs exist to provide SMEs with current accounts or with lending. The array of products now available to these businesses is immense. SMEs also have a preference of working with fintechs. This is mainly down to a couple of things: fintechs are SMEs themselves, so they understand the pain points much better. They offer 24/7 support, are cost-effective and built for purpose, specifically focusing on the needs of the SME. Fintechs are all about disrupting the industry and looking at alternative solutions. There are huge opportunities to support SMEs. Small businesses are crucial in driving innovation and competition in the market. They also play a key role in job creation and economic development. We, in the financial services industry, have

a fiduciary duty to close the gap on those financially excluded. Looking forward, innovative fintechs can dramatically enhance financial inclusion and financial resilience by reducing client-level transaction costs, increasing transparency, and keep improving the efficiency and affordability of expanding service access to more people. It has taken a considerable amount of time for the financial services industry to finally recognise the importance of catering to small businesses and work towards closing that gap on the financially excluded. The landscape is now starting to look very different for SMEs and entrepreneurs but there is still more work to be done.

About Neat Neat makes the world of international trade more accessible to entrepreneurs, SMEs and ambitious young companies from across the globe. Neat is a purpose-built, financial services platform enabling businesses the ability to send and receive money internationally at a competitive rate, access to Visa corporate cards, integrations with accounting and payment software and more, all of which can be done exclusively online. Since its launch in 2017, Neat has helped more than 5000 business customers to expand and trade internationally. Neat is backed by world-class investors including Visa, MassMutual Ventures and the Pacific Century Group. The company is headquartered in Hong Kong with an office in London. Website: www.neat Linkedin: company/neat-ltd Twitter: @neat_app

THE ASIA PACIFIC DIGITAL BANKING OPPORTUNITY In most Asian markets, not unlike Europe or North America, three to five banks handle 80 per cent or more of the market's retail deposits. Although this is, of course, good for the banks, it leaves customers with relatively uncompetitive banking offerings from a set of typically complacent banks. This is set to change. Taking a page out of the UK, Europe and Australia digital banking books, governments within the Asia Pacific region have started down the digital banking path. Hong Kong already has live digital banks following in the footsteps of Australia. Singapore and Malaysia are not far behind and should see launches in 2021. The financial industry is undoubtedly excited about the opportunity. From the consultants who are helping to pull together applications and define business models, to the financial technology providers that are helping new entrants develop core banking platforms, there has been a tremendous amount of money made across the space. The real question of success, however, will be how they can meet the needs of the customers themselves. Initial results globally are mixed unless you view ‘valuation per customer’ supported by the fact that you have a metal debit card as an indicator of success. Many see China as a successful case study. Ant Financial and Tencent, through their digital banks, have provided financial services to

By Zennon Kapron, Director at Kapronasia hundreds of millions of individuals and small and medium-sized enterprises (SMEs). Their success points to a critical difference between Asia and the rest of the world: financial inclusion. A significant percentage of the Asia Pacific population is considered underbanked or completely unbanked, with no access to traditional financial services. Of course, digital banks will bring a new level of competition in the banked segments of the market, they will also help bring individuals and companies into the economic fold as many borrowers are just too costly to lend to. A loan from a traditional Chinese bank can cost the bank $250 and a month to process. A loan from Ant Financial’s MyBank can be completed in a couple of minutes and costs less than a dollar, a stark difference even before considering the cost of servicing loans and any write-offs. However, getting a licence isn’t easy as governments are taking the space very seriously. In Singapore, 21 would-be banks are vying for just five licences. Those that are eventually successful will have their work cut out for them: the paid-up capital required for a Singaporean bank starts at a miserly SGD$15million ($10.5million) but ramps up quickly to SGD$1.5billion ($10.5billion) to become a full digital bank. For whatever reason, the larger fintechs in Singapore, including Revolut and Transferwise, have shied away from applying for a


licence and now are feeling the squeeze. The new Payment Services Act limits these companies, which effectively act as payment processors, with tighter customer requirements in terms of aggregate payments and balances. This may only continue as the space gets more crowded, leaving both today’s successful fintechs also fighting more fiercely for a share of the market. The critical question in all of this is how the new digital banks will differentiate and find success in the market. MyBank and Tencent’s WeBank initially struggled to attract deposits and started to include institutional funding to pad their balance sheet. In many ways, they were trying to disrupt themselves. Around the launch of WeBank, a colleague commented: “Why would I get a WeBank account? I can already do everything on WeChat.” Indeed. Further, subsidising customer acquisition is hard and expensive work. At the start of 2020, Grab and its subsidiary Grab Financial have devalued their rewards programme significantly. What was once a three per cent return on spend is now only one per cent. Spending so much on attracting and retaining customers just isn’t an option in the long run, especially with how thin payment margins have become. The launch of digital banks has once again increased the froth of the Asia Pacific fintech industry and it is, for many, an exciting time. It just remains to be seen if we can get beyond ‘valuation per customer’ and finally get to more traditional measures of success.



DIGITALPAYMENTS: DIGITALPAYMENTS: THE KEY TO SUSTAINABLE E GROWTH Using new technology to ensure efficient and compliant operations. Santosh Tripathy, Global Practice Lead for Digital Payments at SmartStream explains why fintech operations should always be the focal point for sustainable growth

SmartStream has quite a history of new technology, such as AI, machine learning and cloud computing – what changes have you seen in the space? SmartStream is driven by the mission to bring the best and most advanced technology and solutions to our partners and clients. We have historically


been a leader in adapting latest technologies as part of the solution stack. SmartStream has the unique advantage of working with more than 2,000 clients globally that gives us the visibility into the use cases where artificial intelligence (AI) and machine learning could make a visible and measurable difference. We partner with our clients and prospects, and through our dedicated Innovations Lab we analyse various problem statements. The data scientists, solution and domain experts pick the use cases that would bring maximum value for our clients. Essentially, we are always working with real life scenarios, using our partnerships with clients to solve problems utilising the best technology. And this is what makes us different. What trends are you currently seeing in the payments space? The payments space has been going through rapid transformations globally at a pace not imagined by many few years back. Real-time payments and open banking have had maximum impact among the payment participants. Open banking alone has triggered unmatched collaborations and


innovations, often classified as disrupter in the industry. As we speak, innovations continue in the issuing and acquiring space where contactless payments have picked up massively, with the current pandemic playing the catalyst. The idea of digital currencies has been in discussion for a while and central banks now have started exploring the viability of central bank digital currency (CBDC). A phenomenon picking up and worth a mention is the rise of domestic card networks. Recently, 16 banks from Germany, France and three other euro zone countries announced they are working on a ‘truly European’ payments system that shall act as a rival to global card networks, such as Mastercard and VISA. Adoption of ISO20022 as a global standard is another important and decisive trend in the payments space. How will these trends transform the payments industry as we know it? The speed at which this whole ecosystem has transformed and continues to do so during the difficult time of the pandemic has surprised even its biggest proponents. It has acted as a catalyst for the growth in some

geographies at a rate that we simply could not predict, although we knew that the industry would eventually transform. It has essentially been the trigger point for a change that was waiting to happen. The trends have increased the variety and velocity of digital payments, resulting in high volumes of transactions to manage with in limited time frame. Digital payments are becoming frictionless, seamless and invisible. These trends in combination of the rapid rate of change, has necessitated a need of far robust and seamless operational control framework. The challengers and incumbents alike shall need to enhance their operations to sustain this level of growth. We see huge potential of partnership and cooperation when it comes to helping our clients and prospects not just grow at speed, but to sustain the growth that they are already experiencing. The only pitfall would be to look at reconciliations and associated operations functions as compliance and audit activity. SmartStream is at the forefront when it comes to a seamless, frictionless experience in

SMARTSTREAM: PAYMENTS operations, especially by utilising AI and machine learning technology. Do you have any examples of what this might look like in practice? One client we have on board is a large bank in Singapore, widely known for its very innovative and digital transformation, where they are leading the pack in fact. They are utilising our digital payments control solution to handle their digital payments reconciliations and associated operational challenges. Currently, they are utilising our solution to bring about more efficiencies and control in their operations, from alternate delivery channels and ATM. The bank already had quite a decent level of digitisation in their operations, but they aimed higher to increase efficiencies and bring about more control in terms of reputation and financial risks, and now we are helping them to utilise our digital payment control solution. The solution is designed specifically to handle payments in the digital payment’s ecosystem including issuers, acquirers and processors. A second example is one that is very close to our hearts, one of the largest taxi aggregators in the Asia Pacific region with a platform based on a very high level of efficiencies and operational control. This includes everything from booking the taxi, to making payment, to paying partner drivers etc. It also had to cope with any additional conditions, such as a bonus promotion alongside a fixed or variable payment that needed to be made to the partner driver. At SmartStream, we have a unique transaction lifecycle management platform, which manages the entire lifecycle of transaction.

Now we are seeing more and more requests coming from these market aggregators and marketplaces who bring multiple players together on a platform and are now considering leveraging the highly performing and efficient platform that we have to solve these use cases. How do you manage this variety of requests? Digital payment control is an out-of-the-box solution based on a very scalable and powerful transaction lifecycle management platform. We are also cognisant to the fact that end solution depends on the complexity and needs of the client, which our professional services team on the ground adapts to. The platform is very flexible, and has institutionalised best practices that reduces time pressure for business to launch new products and services. The solution is getting constantly enhanced and fine-tuned to accommodate new digital payments products. The dedicated digital payments practice at SmartStream continues to work with our partners and clients to optimise their investments in the payments space. What do you think is still an area that has not seen innovation to the degree expected? I am glad you asked this question; innovations in digital payments transactions capture, processing and the volume growth grab most of the headlines leaving us blindsided to mammoth complexity getting passed over to operations to handle. Operations being a back office function gets noticed only when things have gone bad or are out of hands. Payments industry and regulators have slowly started to take cognisance

of lack to investments and innovations in the operations and control space. The Prudential Regulation Authority (PRA) has started a consultation paper to discuss how to supervise and manage new and growing non-systematic UK banks. PRA has noticed that many of these new banks have underestimated the development required to become a successful and established bank. Operations are the backbone of any business functions and digital payment space is no different. A healthy and efficient operations control framework is a must to sustain the growth we see in the payments space. That shall warrant fresh investments and monitoring tools for some payment participants to strengthen their operations. We are seeing good number inquiries and activities in the Asia Pacific region with respect to challenges experienced by payment participants in the operations space. As mentioned, without changes to the existing infrastructure, the back office will not be able to handle this level of growth for a long period of time. What role do you see for back office operations going forward? Back office operations shall continue to transform to accommodate new innovations in the payments space either through fresh investments in-house or out-sourcing them to specialists. The eventual winners in the battle of customer acquisitions, business growth and eventually profitability shall also depend on the scalability of back office operations. The latest innovations in technology such AI, machine learning, cloud computing and analytics would play a pivotal role to transform operations. The business leaders

across the payment industry are cognisant of this fact and we are beginning to see wheels of change turning. At SmartStream, we encourage payment participants to focus on that whatever role they are playing in this ecosystem leaving the complexity of operations control to us. We believe that eventually, with the use of new technologies, operations will become less manual – and more efficient. It’s just a question of choosing the right technology in the right way to address most critical functions. As one of the key players in the ecosystem, we offer holistic approach to all back office operations through our solutions and services especially in the emerging areas of digital payments, crossborder payments and digital transformation initiatives. The sole vision is to help our partner achieve operational excellence by bringing a frictionless and seamless experience to the entire back office operations.

About SmartStream SmartStream is a recognised leader in financial transaction management solutions that enable firms to improve operational control, reduce costs, build new revenue streams, mitigate risk and comply accurately with the regulators. It provides enterprise-wide, real-time TLM solutions to approximately 2,000 clients, including over 70 of the world's top 100 banks creating more efficient, customer focused, cost-effective and compliant operations. Santosh Tripathy is the global practice lead for digital payments responsible for development and sales of innovative solutions for payments.




Credit decisioning that adopts alternative data sources is crucial for financial inclusion, says John Warren as he expands Provenir’s footprint across the Asia-Pacific region Research by the World Bank suggests more than a billion people in Asia lack access to mainstream financial services. Only 27 per cent of adults have a bank account, and only 33 per cent of firms have a loan or line of credit. For Provenir, the industry leading technology company that works on risk decisioning solutions for fintech and global financial institutions, it's a challenge that it's keen to address. “You can't just ignore 1.8 billion people who don't have a bank account,” says John Warren, Provenir’s general manager for the Asia Pacific region. “In Asia, we're talking about the largest geographic region of unbanked, unrecorded people in the world. There are many countries that make up Asia where over 70 per cent of the population don’t even have a bank account.” “So much of the credit scoring globally in mature regions relies on your bank account details or having a bank account. If you don't have that but you still need to service that market, not just from a business perspective, but from a political national perspective, you've got to find another way of doing it.”


Traditionally, credit scores have been based on bureau data to inform debtors of the likelihood of someone repaying a loan – from existing loans, credit limits, debt repayments and account status, credit inquiries and information from public records relating to bankruptcies. Yet alternative data from alternative sources of measuring people has proven essential for regions like Asia. Provenir suggests new data and in-depth analytics can help financial institutions extend services to unbanked and underbanked populations and create truly personalised products and pricing for customers. “Take a look at the number of bank accounts you've got in countries versus number of smartphones, for example, in the Philippines about 27 per cent of the population has a bank account yet 87 per cent of the population has a smartphone or a phone of some kind.


“The alternative data sources, the telco in that instance, can provide a far richer history and a far greater reach into the population of the country than a traditional bureau. There is certainly an acceptance that there are ways to generate scores or rankings of people without having the traditional bureau. “This approach has driven our business at Provenir. Having an agnostic view of data, we are able to imbibe any of this data, whether it's a bureau and the telco or even psychometric scoring or behavioural-based scoring bringing that together. It may be in the lending or the credit side of the business that these people never end up with a bank account.”

HEADING UP APAC Warren joined Provenir earlier this year to drive its presence in Asia – just as the coronavirus pandemic took grip and global lockdowns and remote working became the norm. Prior to that, he worked at financial technology companies,

including Temenos, FIS and SunGard, gaining invaluable experience in the areas of risk management, decision analytics, and business intelligence. “I joined the organisation just as Covid-19 hit and I’ve managed to work remotely as Provenir responded fantastically to the challenges that we've had during the pandemic. “For me, it has been pleasing throughout this year to have conversations with clients to find a mindshare and an alignment in thoughts. We have pursued the direction of enabling financial inclusion through alternate data due to the success we've had with clients in the region and they understand that they need to operate in a different data paradigm than they did before.” In April, GoBear – a Singapore-based fintech focused on improving financial inclusion throughout the ASEAN region – chose the Provenir cloud-based platform to support the demand for simplified, digital-first banking experiences

While we are not lending the money,we are making sure that anybody and everybody has the potential to have access to money

In 2019 the UK was named the world’s top fintech hub, with startups raking in over £4.5billion in just three years, according to experts. As well as this, the UK was named fourth in the world for scale-up investment, showing the UK’s commitment to leading the global fintech movement.

throughout the region. Provenir has also partnered with a global Tier 1 bank in the region for data cloud integration and is set to unveil its first client in Indonesia – a large alternative fintech. “Over here, we are in the epicentre of lending innovation from the challenger banks and the NEO banks, as well as the fintech lenders. The most impressive thing about the adoption of cloud here is just the speed with which people have been able to utilise the cloud technology to come up with solutions,” says Warren. “Provenir is completely cloud native and cloud agnostic which for me is also tremendously exciting as we’re at the bleeding edge of most things. We power an awful lot of the credit decisions around credit card issuance delivering instant decisioning in milliseconds.” According to Provenir, its software processes more than one billion transaction decisions per year for a variety of global clients across buy-now-pay-later, payments, SME, consumer and auto finance – from startup fintechs to Tier 1 banks. Single clients can make millions of decisions a year on a global basis, running batch processes

on millions of users in only a few hours, and with greater insight than previously. "Our insight cloud offering means we are able to analyse data in almost real time and provide feedback on exactly how your models are performing across any risk decisioning process. We're not limited to the type or the underlying architecture or whether it's an internal and external model. We want to make a difference to people’s lives," Warren says. "While we are not lending the money, we are making sure that anybody and everybody has the potential to have access to money, whether it’s a payday loan or a $5 telco top-up when a guy's starting his ride-hailing morning on his scooter, so that’s a nice place to be. Our aim is to facilitate lenders with the ability to lend money to as many individuals as possible, in a responsible way."

COMPANY INFORMATION WEB: LINKEDIN: company/provenir-inc-–-financial TWITTER: @ProvenirGlobal

At The Fintech Power50 we are looking into the debate about what region or city is the fintech capital of the world. Is the fintech capital London,New York, the Silicon Valley or elsewhere? Should the title to the city with the most players, the greatest fintech investment or the largest number of users of challenger bank or bank challenger services? Order your copy now at


HOW AUTOMATION AND REAL-TIME PAYMENTS SAVED 2020’S REGULATORY REQUIREMENTS Two years ago, Kani launched its reporting and reconciliation tool for fintechs, led by CEO Aaron Holmes. Here he explains just how the company has found itself on a growth incline throughout one of the toughest 12 months on record. Tell us about the company, how big are you and where are you based? We currently employ 13 people but we’re planning to expand to 18 in the coming months. We’ve gone through that initial product build where we’ve started working with some great clients, such as Railsbank and Paysafe. Now we’ve got the proof of concept out there, we’re able to demonstrate that we are genuinely working for big companies, we need to scale up the team to match our


By Aaron Holmes, CEO of Kani Payments growth plan. The company is currently based in the North East of the UK, conveniently home to the National Innovation Centre for Data, but we’re also looking at other outposts, such as Romania and North America, which both have a good tech scene and great universities. What was your aim when you started the company? Previously, I was part of Global Processing Services (GPS), the payments platform behind Revolut, Starling Bank, Curve


and 150 other fintech disruptors. GPS's founders also owned Flex-e-card – a business shopping centre gift card issuer. I have held roles across both companies working as the chief operating officer of each, before moving into the chief innovation officer role at GPS. On the Flex-e-card side we had our own finance team, which meant having to reconcile payments and file reporting to Mastercard, Visa and to the regulator. And then on the GPS side, we were trying to support other fintechs to effectively launch and scale their own products. My feeling was that if in-house had these common problems with Flex-e-card and there wasn’t a good solution on the market, then every other payments companies would have the same problems too. And so, we’re addressing it through Kani.

The aim is really to help financial services companies, but particularly fintech disruptors and payments companies to understand and utilise all the data they get. By using it effectively it's much easier to report and fulfil all other obligations. Whether that’s Mastercard, Visa or regulatory reports, through our platform these are constantly in use and crucially, accurately reconciling all payments while making sure that all the money is where it is supposed to be at any time. This has become even more important since Wirecard. Regulation is such a hot topic right now, how have you approached it? What we found is that once you’ve got the data, regulators want to know if you can 1) show you understand everything and 2) evidence

it. Quite early on we realised there was an overlap between what the regulators wanted and other reporting requirements. For instance, if the data is in the right format then it shouldn’t be too hard to turn a regulatory report into something that shares commonality with Mastercard. What sort of timings does the platform work to? We spent a lot of time developing what we term ‘autodata’, it allows you to send new data files with a minimum amount of configuration which means the turnaround time is very fast. We’re able to create reports based on new data in minutes, that would previously have taken weeks of manual work. Yes, reporting is typically done in quarters or at the end of the month, but through our system you can see it building up every day which means you submit at any time. It allows you to look and ask: ‘what’s my current position?’. How UX driven is the platform? The platform is very heavily user-driven; we have always tried to put the client at the heart of everything we do. We try and actively engage, asking for ideas about new features and the like. We’ve also won awards for our platform and have been nominated again this year numerous times. Will you continue to focus on Europe or are you looking to grow? Our initial plan was to focus on UK and Europe but that’s not what’s happened in practice. Since we launched two years ago, and more recently since Covid-19, we have had a lot of inbound enquiries from companies globally and now

have clients in five continents. For instance, we are currently supporting a challenger bank in Australia and have had a lot of interest from the Middle East and North America. I think this is because the solution is applicable worldwide which means we can rapidly expand into other countries. Also, we don’t have the same regulatory challenges as other companies as we never handle any money – our product is simply to better understand data which means there are fewer hurdles. Speaking of Covid-19 – how have you coped? Back in March, we didn’t know what kind of impact coronavirus would have. When lockdown started we were already working from home as part of a test environment to make sure we could operate remotely while keeping our data secure – this hasn’t been a problem due to the operating suite we use and our robust architecture, so things haven’t really changed but it’s certainly interesting in terms of an office operation. Initially, our concerns were that working remotely things slow down but actually they’ve ramped up. We’ve gone ahead with international expansion much

About Kani

Kani exists to tackle some of fintech's hardest challenges within the payments industry. BIN sponsors, challenger banks and other fintechs are using Kani to do two weeks of transaction reporting and reconciliation work in under 30 seconds. Our mission is simple, we enable your teams to complete tasks and processes that exist in almost every payments company in the world. We are focused on leading in the payments

more quickly as there’s no need to get on a flight to agree a framework in other countries. I suppose we were very well insulated and protected from the pandemic, if anything it’s helped acceleration and the team now prefer to work from home. So far, it’s been very efficient, we’ll probably move back to a hybrid office/home structure once the pandemic is over. What other highlights have you seen this year? We've actually just hired a data science lead who has a PhD in mathematics and machine learning. We've also been building further links and partnerships with the local universities and the National Innovation Centre for Data, so understanding what more we can do with datasets is a huge driver over the next year. Internally, we have a great company culture where we listen to our staff regularly and move forward as a team. We know that having different voices and ideas reflected is of high importance for our staff and future employees so having diversity and inclusion at the centre of our company culture is key and something we’re building on all the time. industry, not just when it comes to the world class, awardwinning solution we provide, but from a culture perspective, our people and the partners we work with are at the heart of it. Website: www.kani Linkedin: company/kanipayments Twitter: @KaniPayments

For us, we want to move finance teams and operations teams from having to do the work to simply overseeing it. There shouldn’t need to be any manual effort for companies when it comes to reporting and reconciling data, instead they should spend time building products for their customers and move the back-end reconciliation from doing, to just managing. You mentioned Wirecard and Railsbank, was that a difficult acquisition to support? No, actually there’s been no hiccups and it’s gone much more smoothly than we thought. Mainly because there was a lot of late nights involved but I think it’s a credit to the team as to how they managed the transition so well. I think it was quite an impressive feat. We talked to the team over Slack most days; luckily we were able to help with a lot of the complex data coming in from Wirecard. Making sure that it fed into our platform which in turn supported Railsbank, it worked quite well. Where do you see the company heading in the next 12 months? We’re in a fortunate position at the moment and I think with growth on the horizon we will look towards our Series A investment round, as now we’ve got a great test bed we need to look at expanding our client base even further. Last year if a tier 1 bank had approached us, I don’t think we would have been ready but to give credit to our CTO, we are now at the stage where we certainly are ready to scale up.



IS YOUR ROBO ADVISOR FIT FOR THE JOB? There are several recurring topics on the agenda of the modern wealth management industry. Notably, most of them refer to digitalisation. The keynote speakers at wealth conferences deliver presentations on whether full-digital or hybrid models would be preferable. Panel experts discuss the pros and cons of shifting the operations to the cloud, and the industry contemplates the usefulness of chatbots to increase customer engagement and brand awareness in their digital channels. Amid the strategic decisions and the fears of a mysterious artificial intelligence stealing the jobs of financial advisors, we believe one important detail remains overlooked. Do we properly understand the machines that are to automate an essential part of our value chain or that may become an alternative to our human operators? Do we assess them with the same scrutiny


There’s not one size fits all when it comes to choosing technology, says Kidbrooke's CEO and Co-Founder Fredrik Daveus

as for a new employee we would hire for a job? Although we tend to classify people for various purposes, there are hardly two mortal financial analysts thinking the same way. Human judgement is composed of multiple convictions; it is affected by individual biases, personal quirks and mood changes.


In theory, there are an infinite number of mechanisms suited for automated investment decision-making, but there are two distinct types that we repeatedly come across in this space. The first and the most common principle of automated investment decision-making is modern portfolio theory (MPT), which earned a Nobel Prize in Economics for Harry Markowitz. Since then, it has become the first topic in any introductory finance curriculum around the world. The machines based on this principle usually estimate mean and variance of the assets’ returns based on their past performance. Then, they estimate correlations between these returns and calculate portfolio weights for all possible combination of assets. After that, the machines maximise the expected return for a given standard deviation over the set of weights. Finally, they determine a suitable portfolio, given the investor’s level of risk aversion.

MPT in its most popular form suffers from several drawbacks. First, these machines are single period by design. This means that they estimate their parameters from historical data for a given time horizon. This feature makes it impossible to include features such as rebalancing or realistic tax deduction, where monthly account balances can differ for each year. Second, the assumption that returns follow a normal distribution is unrealistic. It tends to underestimate large losses and thus give too optimistic predictions. Third, this approach is siloed in its nature, because it is difficult to use it to model assets and debts together or include more complex instruments, such as mortgages in the analysis.

WHAT IS THE ALTERNATIVE? Another family of models able to automate financial decision-making is far more sophisticated and elegant. The

KIDBROOKE: WEALTHTECH scenario-based models adopt an approach that allows carrying the entire balance sheet of the end-customer into the future, cashflows included. These machines allow for more advanced probabilistic modelling of the underlying assets and debts on the end-customer balance sheets. The scenarios fuelling these machines can easily incorporate wealth managers’ outlooks on how economies will develop into the future. Like in the case of the first family of the machines, the optimal portfolio for a given customer is determined by maximising a utility function, defined by their unique financial situation and risk tolerance. There are numerous distinctive advantages of the scenario-based approach of financial machines over the standard, simplified use cases of the modern portfolio theory. First, scenario-based models are multiperiod, which allows financial brands to differentiate themselves by providing additional functionalities such as automatic rebalancing and realistic tax deduction, which would not be possible under the first approach. Second, unconstrained by the assumptions of normally distributed returns and the quadratic nature of the utility function, the scenario-based machines allow for more accurate stochastic modelling of institutions’ product universe. This would have a similar effect on the resulting calculations of consumers’ finances as would an increase in your phone’s camera resolution on the pictures you’re taking. Third, amplified by the cloud, these machines are no longer constrained by poor performance but can evaluate thousands of realistic scenarios

per second, contributing to a fast and seamless customer experience, which is critical in a digital context. And fourth, the full balance sheet approach allows modelling of virtually any financial situation that the end-customer could face throughout their lives. This design supports a number of

Given the right technology, it is possible to give the prediction machine the soul, the spirit and the story of your financial institution customer journeys only constrained by the fantasy of the financial institution. Essentially, this technology allows for building out a genuine family office offering for the masses, destroying siloes in digital wealth once and for all. So, ask yourself again, which new employee would you hire for your department? An undergraduate that has an ambition to only ever be familiar with modern portfolio theory; or a flexible grad-school level professional skilled in stochastic modelling? The professional that with your guidance and assistance, can

model any complicated situation of your customer? You might wonder, given such a dramatic difference at the very heart of these machines, why many reputable institutions carry on cutting corners and spending millions on developing inferior experiences for their customers. We believe the answer is in the

short-term strategic outlooks and a reactive digitalisation strategy pursued by many such institutions. The user experiences might look similar, but the first type of machines heavily limits an opportunity to develop the holistic approach to consumer’s finances. Therefore, these companies risk having to replace a newly built, expensive customer journey with another one in the future. Although the fintech space tends to criticise the incumbents for a myopic attitude to digitalisation, we have an example of the opposite. Some established financial institutions adopt a surprisingly hands-on approach to the digitalisation of their businesses. Take Skandia Life, one of the largest life insurers in Sweden, who recently released a hybrid pension planning solution. Since July, Skandia’s customers can save for their pensions in a channel of their choice – be it a physical meeting with a financial advisor or a digital journey – all driven

by a consistent, scenario-based machine at the heart of the solution. Currently, this approach helps Skandia own the seamless and fast experience of the solution. In the future, it would enable the insurer to easily extend their offering to support more wealth journeys, laying a path for pioneering open finance with a holistic view of their customers’ finances. The quality and attention to detail are not always visible or understood by the customers of the financial institutions. Although many banks and insurers made commitments to digital strategies, there is still a lack of discussion about which machines would replace what human tasks and how good they are. We believe that choosing a superior technology to drive your digital solutions could not only be a reliable differentiating factor to your brand but also a great strategic choice for enabling further opportunities to innovate. Given the right technology, it is possible to give the prediction machine the soul, the spirit and the story of your financial institution. And most importantly, the right machines are better suited to learn, develop and adapt to your vision as times change.

About Kidbroooke Founded in London and currently headquartered in Stockholm, Sweden, Kidbrooke is a tech company providing B2B automated financial analytics via APIs designed to lower the cost of providing wealth management services without compromising on performance scalability. Website:




BANKING-AS-A-SERVICE A UNIVERSAL PLUG THAT MEETS EVERYONE’S FINANCIAL NEEDS There is a trend brewing in the financial space that, once again, has the ability to impact the digital world You have likely heard a lot lately about technology companies introducing payment flows within their apps and doing so within a few short months. You may also have heard about banks, financial institutions or fintechs launching full-fledged card issuance programmes within record time. Processes that used to take at least a year, have now been shortened dramatically due to a major process disruption that is taking place within the financial sector – banking as a service. Banking as a service (BaaS) is simply defined as banks opening up their systems to allow fintechs or other third-party providers to carry out banking transactions over the internet, without the bank having to develop these functionalities from scratch. This process has been rapidly gaining steam in the last 18 months. BaaS is a big deal today because of the potential


By Prajit Nanu, CEO

& Co-Founder at Nium it brings to make it much easier for anyone (including startups, fintech unicorns, multinational technology corporations and banks) to access and create simple, fast, secure and transparent banking experiences, even if they do not have the means to do so in-house.


The possibilities surrounding BaaS are tremendous – promising new revenue streams, expanded customer bases and improved experiences across a wide range of banking and financial services including; account and transaction services, e-wallets, loan processing and even shoring up compliance and trust. This is the new world of banking; a plug-and-play model for banking services. Some in the financial industry have labelled it the ‘API-fication of banking’. We, at Nium, like to call it a universal plug for financial services – where companies can pick and choose specific features to fulfil a specific business need, or merge multiple solutions to create an entire neobank if they wish.

BUILD AND GO LIVE FASTER With growing demands for digital experiences and the potential for fintech to redefine banking, BaaS has the power to unlock capabilities and create new revenue streams for those bold enough to revamp their business model. However, while many look to become a fintech or offer fintech solutions, they may not have the existing technologies and capabilities to build and go live quickly enough before someone else does so. The quicker they go to market, the faster they can capture market share. In the race to finish first, close collaboration is encouraged to ensure that all aspects of BaaS are provided for at the shortest time possible.

Working with third-party BaaS providers can allow you to bypass much of these developmental complications. With an existing tech stack that you can just plug-and-play, Nium allows banks, other financial service providers and even enterprises to anticipate demand and scale up or down as needed, customise product offering, and enter new markets. For instance, Nium is working with a maritime company on a fully customised expense management solution that addresses a multitude of payment issues, including challenges on salary disbursements to a multinational workforce that has no stable network connection while at sea, concerns on piracy and exorbitant foreign exchange (FX) charges typically imposed on remittances to loved ones back home. To combat these legacy challenges, Nium created a spend management program that will allow the shipping company to disburse salary payouts directly to seafarers’ virtual Visa card account that can be accessed via a customised app. Utilising the app, and combined with Visa’s virtual card technology, crew members can immediately access their wages from anywhere in the world while onboard or on land, send money overseas, initiate card-to-card transfers, shop online and use their Nium Virtual Cards with mobile wallets onboard. Our flexible tech stack enables us to bundle relevant solutions for the maritime company and solve their payment challenges, not only within a couple of months, but also at a fraction of the cost it would typically take with multiple partners or to build in-house.

GO FASTER. GO FURTHER. OVERNIGHT A second challenge for businesses intent on providing financial services products is dealing with complicated regulation and compliance. Take Brexit for example – when the transition period ends on 31 December 2020, businesses who possess an EU licence will no longer be allowed to provide financial services in the United Kingdoms – they are required to apply for additional licences specific to the country. Similarly, the Asia Pacific region is a highly fragmented market home to multiple regulatory bodies. Without a centralised governing body like the European Union, those who attempt to build out a payment solution on their own would also have to reach out to multiple regulators and

from the Financial Conduct Authority (FCA) in the UK to issue e-money and provide cross-border digital payment services in the country postBrexit which will help minimise disruption for our customers. Within each market, Nium takes care of the different know your customer (KYC), regulatory requirements, and the infrastructure to receive or send out payments. All fraud control measures, and compliance requirements are also included in a single platform, so that customers can send, spend, and receive money from more than 130 million end users across more than 100 countries, 65 in real-time – without compromises on security. Supported by Nium’s portfolio of licences, local or regional businesses turn into global payments providers overnight.

As a global financial technology platform that aims to redefine A UNIVERSAL PLUG FOR ALL YOUR the way money FINANCIAL NEEDS moves across Undoubtedly, what will borders,this is just distinguish the future of BaaS the beginning for us hinges on what the financial government bodies individually before their solution can see the light of day. In such situations, partnering with financial technology solution providers that have a large portfolio of licences under their belt can allow businesses to reduce the burden of this cumbersome process. That is why building out our global regulatory capabilities continues to be a critical objective for Nium. Our network is powered by our portfolio of licences, hard-earned by building trust with financial regulators in nearly 40 countries. Most recently, we have received our Electronic Money Institution (EMI) licence

technology solution providers can offer to support banks, financial institutions, and businesses in the frontiers of the new global economy. As a global financial technology platform that aims to redefine the way money moves across borders, this is just the beginning for us. Our team is continuously pursuing incremental growth and looking for the next milestone in our pursuit of an open platform, a universal plug for financial services so that any business, regardless of size or industry, can build a world free of the old constraints and restrictions – a world of open money.

Speaker: Prajit Nanu INFRASTRUCTURE SUMMIT Date: 9 Dec (Wednesday) Time: 08.00 SGT, 9 Dec / 00.00 GMT, 9 Dec / 19.00 EST, 8 Dec / 16.00 PST, 8 Dec Format: Panel (50 mins) Topic: The Evolving Payments Ecosystem Panellists : Al Kelly, CEO and President, Visa Prajit Nanu, CEO and Co-Founder, Nium Anthony Eisen, CEO, Afterpay Moderator: Melissa Guzy, Arbor Venture

About Nium Nium is a global financial technology infrastructure platform redefining the way consumers and businesses send, spend and receive funds across borders. Nium’s goal is to make the movement of money seamless. We devise elegant and modular solutions for complex business problems. Be it an individual, new-age digital bank or a traditional industry behemoth, we pride ourselves on creating financial infrastructure for every level of sophistication Website: LinkedIn: company/nium-open-money Twitter: @NiumOpenMoney




REINVENTING THE FOUNDATIONS OF ASIA’S BANKS – FOR RECOVERY AND PROSPERITY The road to recovery for Asia’s economy, like the rest of the world, is fraught with challenges. There is also no shortage of commentary on the ‘fitness’ of banks to meet the challenge of Covid-19 and a rapidly changing future, yet one question is constant – is the legacy technology appropriate to meet the challenge? Our own research, in coordination with market intelligence firm IDC, reveals that 95 per cent of banks in Asia are running on core technology that is nearly 20 years old. This second and third-generation technology severely limits the banks’ ability to innovate at speed to withstand this ‘new normal’ of economic uncertainty. Regardless, they have a duty to provide for their customers, and Covid-19 has shown how crucial they are to providing support in a time of crisis. Technology alone is not the answer to the challenges above, but we are already seeing significant moves from government in the areas of funding and regulatory shifts such as digital banking licences, sandboxes, open banking etc. Technology clearly does have a vital part to play in helping to open up the financial services industry to organisations who can take a high tech approach to lower their cost to serve, manufacture new products, improve customer experience and address risk using diverse data sources and sophisticated analytics. In fact, our research shows that running a bank’s systems on cloud technology can reduce IT costs by up to 70


Nick Wilde, MD, APAC, at Thought Machine per cent compared to traditional legacy infrastructure. With the still rapidly growing penetration of smartphones across all demographics mobile banking is the (not so) new king and Covid-19 has accelerated this across the board pulling in even the most reluctant mobile banking users. However, the future isn’t just the current crop of mobile apps with basic balance checking, money

Running a bank’s systems on cloud technology can reduce IT costs by up to 70 per cent transfer and bill payment. The key will be for the bank to truly embed itself in the customers world, providing a seamless 24/7 solution to lifestyle needs. Firstly, the bank has to be where the customer needs them and stops working on the principle that the customer will come and find the bank. That means lifestyle apps, platforms, ecosystems, marketplaces and other innovative distribution models; working with partner organisations to ensure you are there at the time of need whether that is a consumer paying for a cab or an SME being able to get a loan to fund raw materials for a special order. With an architecture that


is cloud native and 100 per cent API-microservice enabled Thought Machine Vault allows a bank to integrate the core into an ecosystem while delivering unparalleled scalability, resiliency, security and privacy capabilities. The bank then needs to be able to onboard customers remotely and rapidly. Standard Chartered Bank’s Mox in Hong Kong is onboarding customers in a few minutes using multi-factor authentication including biometrics. Whether we are a consumer or an SME, we are all generating more data exhaust than ever before in our interactions with Google, Facebook, e-commerce sites , etc. By combining a variety of data sources, including those that the customer directly provides to the bank there is the opportunity to develop a far deeper understanding of individual behaviours and needs on an industrial scale through analytics. Insight can then be used to generate not just improved targeting of offers but also improved products. Thought Machine’s Vault offers not just a secure, scalable, resilient cloud native core but also ‘financial products as code’ which allows banks to create unique products from scratch or to create new twists on existing products. In Asia, platform business models are gaining pace. For example, Grab is a leading ridesharing company that supports numerous SMEs, more than 500,000 gig economy workers and 36 million customers across eight countries. A menu of

services are available on Grab’s platform, from money transfers and insurance to urgent medicine delivery. This is just one of many examples where technology companies in Asia are harnessing powerful technology and evolving into multifaceted lifestyle and increasingly financial service providers. It is a developing revolution in the banking arena that promises to have the same impact as e-commerce had on high-street shopping and will provide customers of all types the same dramatic benefits. All the technology described offers banks the same engineering and capability that powers tech giants, such as Grab. The landscape is changing and the cloud is making it happen at a time when it is needed more than ever. For banks it is both a threat and golden opportunity, they are faced with the choice of creating the future or being retired by it.

About Thought Machine Founded in 2014 by entrepreneur Paul Taylor, Thought Machine wanted to enable banks to deploy modern systems and move away from the legacy IT platforms that plague the banking industry. We do this through our cloud native core banking platform Vault. It does not contain a single line of code which is legacy, or pre-cloud. Customers include Lloyds Banking Group, SEB, Standard Chartered, Atom bank, Monese and Curve. Web:


WHAT’S THE TRUE COST OF FRAUD TO YOUR ONLINE BUSINESS? Global e-commerce fraud losses are projected to exceed $37billion annually by 2024 (pre-Covid-19). While that figure seems daunting, in truth it understates the problem.

E-commerce merchants tend to focus on the financial hit from fraud chargebacks and rightly so since that is where the problem originates. But sadly, that is not where it ends. Just like a photographer needs to adjust their depth of field to bring the entire image into focus, let us take a moment to adjust our perspective on the e-commerce fraud cost landscape.

IMPACT TO YOUR REVENUE Within Asia, especially, Southeast Asia, the rate of attempted fraud is up to 12 times greater than the global average and online merchants lose an average 1.6 per cent of revenue to direct fraud each year. Even so, most online merchants will tell you that they don’t have a fraud problem. It may surprise you to hear this, but for the most part, we agree. If merchants had an ongoing fraud problem, the card brands wouldn’t allow them to continue processing on their networks. The question is, what did they do to bring fraud down to an acceptable level? You may have heard it said, ‘It’s easy to eliminate fraud. All you have to do is decline every order’. While that is an obvious exaggeration, there is also some truth in it. Fraud loss and revenue loss are like two opposing weights on a scale – when fraud loss goes down, revenue loss goes up. The

safeguards implemented by online merchants today have cost them more than the problem they set out to solve. The average online merchant doesn’t have a fraud problem. They have a revenue problem.

online merchants in Asia to control fraud is mounting. In response, the efforts to battle online fraud has grown more than six per cent annually. Now the average e-commerce merchant spends almost $4 fighting fraud for every $1 of direct fraud loss. Wrapped up in that number are the costs of manual reviews pre and post transactions, staffing (quality control, rules management, IT programming, chargeback management, reconciliation, salaries), third-party transaction costs and fees for shipping, restocking, marketing and other overheads. Fighting fraud is complex and expensive and each year the problem grows.



Direct fraud loss is a significant component of the total cost of fraud, but we can’t overlook the fact that it’s also the catalyst for loss in other areas of your business. Sixty per cent of online businesses have experienced the same or growing fraud losses over the past 12 months. More than 50 per cent have experienced repeated fraud attacks in the form of payment fraud, account takeover and brute force attacks. The pressure on

Unfortunately, not very well. The safeguards implemented by merchants have cost them more than their fraud problem. Let us look at some stats (pre-Covid), Globally, $300billion in revenue is lost annually due to false declines, on average, $30billion in direct fraud losses are incurred, card-not-present (CNP) approval rates average only 83 per cent, compared to 98 per cent for retail sales. In Asia Pacific, the number don’t look good – online merchant are leaving far too much revenue on the table due to the fear of fraud, spending more to fight it, missing the know-how and experiencing customer churn from checkout friction and poor customer experience. Vesta's payment guarantee: Allows online merchants to remove the barriers they built to protect themselves from fraud.

Shabab Muhaddes, GM, Vesta Asia Pacific on protecting, and boosting, e-commerce in a Covid-19 world

About Vesta Vesta is a fintech pioneer in fraud protection and fully guaranteed payment technologies, helping online merchants, major telecom providers, money remittance, payment processors and acquirers optimise revenue by eliminating the fear of fraud. The company’s flexible, scalable solutions enable companies to grow their businesses by focusing on revenue rather than risk, delivering secure, frictionless transactions that maximise acceptance and improve customer experience Website:

Instead of turning customers away, merchants can tear the walls down and let orders flow in, knowing that guaranteed fraud protection means they will not lose out and drives a better customer experience. Vesta’s promise: We increase approvals and grow revenue with 100 per cent fraud chargeback protection. If we are wrong, the fraud is on us. We eliminate the fear and cost. Vesta’s technology: For more than 20 years, Vesta has led the way in combatting fraud with our proprietary and patented solutions, using machine learning, real-time fraud analytics, and deep link analysis. Our technology keeps us a step ahead of the bad guys. Vesta’s experience: Since 1995, Vesta has been a premier provider of fraud management and payment technologies. We were the first to guarantee e-commerce transactions.



GLOBAL NEOBANK SOKIN PREPARES FOR LAUNCH In 2017, the world’s first neobanks were launched with the intention of changing the financial services world. They were online, exciting and new, but for many people never delivered the revolution they promised Vroon Modgill, CEO at Sokin, has watched the development of the fintech sector and is now launching a global currency account that will make the Sokin brand a household name. Vroon could see that there was room for improvement in the way that payment services are provided to the masses, including the unbanked. By removing and breaking down barriers across the payment cycle and using a low-cost subscription model it is possible to give people and businesses the flexibility and value they want. “I was an early adopter of neobanking,” said Vroon. “The ability to accept, hold and pay out money from a digital account


By Vroon Modgill, CEO at Sokin

made so much sense. The problem has been that in trying to replace traditional banks, neobanks wanted to replicate all the services and create themselves in the image of the old financial services sector. “They did not focus on the products which people actually want and need. This is why I set


up Sokin. Sokin is about offering secure, easy to use, low-cost payment and accessible banking services. We are not setting out to solve all banking issues, but we will provide the services millions of people want to use day-in and day-out.” Vroon came up with an initial solution; to launch a subscription-based model with a global currency account. He then set about creating the operational systems to deliver the products. Sokin has already announced a principal membership agreement with Mastercard Singapore and affiliate programmes with Mastercard for the UK and European markets, with further announcements in the pipeline.

“As an international businessperson I was very aware of the limitations of traditional and new banking services. I was fed up with long and involved sign-up processes; great introductory offers replaced by repeat charges for the same services; and a range of international restrictions which made it impossible to use the products when and where I wanted. With Sokin we could see where others had been going wrong and use the latest fintech technology to build the systems to deliver the services we know people want and need.” Linked to a multi-currency card, the Sokin service uses a single monthly fee which gives account holders unlimited

SOKIN: DIGITAL BANKING and then the transfer cost is included in the payment fee. So why, when you go to make another transfer, doesn’t the cost reduce? There is no need to set-up the account or go through the administration processing again. This allows us to offer clients a full transfer service, for unlimited payments, based on a single monthly fee.” Rather than focus on single markets, Sokin wanted to provide the same level of service across multiple regions.

Sokin will be the first global solution able to offer a full suite of financial products, including business and customer accounts, in more than 80 countries payments and money transfers. There are no hidden costs, no additional mark-ups and no repeat payments. “A core element of all banking is making and accepting payments,” added Vroon. “As someone who has worked in the industry, I knew what it could cost to set-up an account, to transfer money. The cost of checking the person opening the account, the administration

“One factor which was important for me was having access into China, South Asia and other under-served regions like Latin America. Business, especially after the coronavirus has pushed economies into lockdown, has moved online. Sat in front of a screen, Montevideo is the same distance away as Monte Carlo and Shanghai is on the same video call as Chennai, so businesses need a firm which

can easily accommodate all international payments. This is why we have made sure, for example, that we can transfer any currency into any bank account in China within two hours (excluding weekends and Chinese bank holidays).” When launched, Sokin will be the first global solution able to offer a full suite of financial products, including business and customer accounts, in more than 80 countries. It will allow users to open digital accounts on a simple to use app, which gives them the power to make unlimited payments and money transfers for one inclusive monthly fee. Sokin has quickly established itself on the global map opening nine international offices which will allow businesses and consumers to open accounts in more than 200 countries, covering six global regions. Services will be provided through Sokin Cards in more than 80 countries and Sokin Wallets in 150 countries with the ability to exchange money in over 35 different currencies.* Sokin is scheduled to launch in 2021. It has already signed up 25,000 businesses and customers who will start beta testing the company’s products prior to launch. Sokin wants to have, from launch, the correct approach to environmental, social and corporate governance (ESG) issues so has built its products around the latest environmental policies and procedures. “One area I am very pleased we have been able to develop has been the use of recycled plastic payment cards. Each year six billion PVC cards are issued with the associated pollution. We have partnered with a world leading card manufacturer which will provide us with

recycled plastic cards. Starting with more than 85 per cent recycled material, we hope to be able to offer 100 per cent recycled cards in the future.” By combining card payments, trade finance and currency exchange through a single platform businesses and individuals get genuine benefits. The partnerships Sokin has already established offer market leading rates and the efficiencies businesses and individuals want. “The world is ready for neobanking 2.0 and we are very pleased that in 2021 Sokin will be able to deliver the services and products which save millions of people money, make their lives easier and their businesses more profitable,” concluded Vroon. With its strong management team, Sokin is gearing up for its Series A funding round in 2021.

* Subject to, and pending, local licensing and regulatory requirements.

About Sokin Sokin is a leading financial service provider that enables global payments for both consumers and businesses. Sokin believes in giving you the power to make payments and transfer money as many times as you want per month! Whether it’s sending money back home or transfers to friends or even settling with businesses using Sokin, our innovative process makes the task quick and easy. Sokin delivers global payments for a fixed fee, is commission and hassle free! Website: LinkedIn: company/sokin Twitter: @SokinGlobal



EMPOWER REVENUE GROWTH WITH A SOUND KYC STRATEGY Nowadays, when know your customer (KYC) and anti-money laundering (AML) regulations are imposed on various traditional financial institutions – banks, insurers, export creditors, and even non-financial industry, fintech, virtual assets dealers and non-profit organisations – choosing the best AML and KYC software becomes a grueling task. Many C-suite members see KYC & AML solutions as a burdensome cost that has been forced upon by the regulatory demands, which is similar to how a technical department was seen 30 years ago. Then a different perspective is – if compliance is mandatory, why not utilise these solutions into your revenue strategy? Although acquiring users has never been easier as today, the intense competition is increasingly driving the acquisition cost upwards – specifically as the battle of attracting the best customers that provides the highest life time value (LTV) is constantly chasing you. Digital transformation is forcing companies to change their business models and adapt to the new market reality. What’s interesting is that companies are not driving this change but their customers. So, what does digital transformation mean and what do global digital customers want? Simply put, it is about changing the way a business interacts with its customers and how they provide them with a


By Sebastian Zilliacus, VP Asia for ZignSec consistent experience and value. The faster and more accurately you can onboard a customer, the happier and more engaged the customer will be with the brand, and the higher LTV a customer becomes, which in turn increases the revenue for the company. In order to keep up with these customers, your business needs to embrace technology to deliver a tailormade experience. It should visually entice the customer, doesn’t need to request for too much information up front, is fast enough to not bore a customer, provides an identification solution that the customer is familiar with, and adheres to the regulations. Although numerous global KYC providers offer powerful solutions incorporated with innovative strategies, their products often leave clients unsatisfied. These dissatisfactions include longer verification time, false positive results, extra costs and other frustrating constraints that prevent a business from achieving its goals timely and effectively. The biggest bottlenecks to challenge in AML and KYC verification processes to date are:


insufficient automatisation, too many integrations and lack of integration with other elements. However, by using orchestrated automation, service providers and financial entities can significantly trim these processes for more efficient KYC practices. Instead of sending data to a torrent of unsustainably expensive, slow and unmotivated verifiers, automation can verify individuals using highly accurate systems in seconds. ZignSec is an innovator in the field of orchestrating the automation of the future’s onboarding with locally accepted personal identity verification methods and stands ahead of the legions of firns competing in the sphere of providing KYC and AML services. We pride ourselves on helping regulated and non-regulated businesses reduce onboarding time from days to minutes, and reducing cost by more than 60 per cent at the same time, through orchestrating the automation of their customer onboarding process while being compliant to KYC and AML regulations. Being an aggregator of global and local products, while developing and operating our own products, allows us to provide the best 'glocal' solutions such as:

■ Tailor-made solutions for your specific needs ■ 2-in-1: maintain commercial arrangements with an existing provider and streamline technical integration

■ Local customer onboarding solutions with multiple interconnected products that automates your compliance needs via a rule-based engine ■ Global solution with locally best-fitted products

LinkedIn: timmschneider Email:

THE FUTURE The main challenge for the future of client onboarding is how customers can prove their identities in an age where regulated companies rarely interact with their customers face-to-face. We believe an orchestration of automated micro-services is the future of KYC. By enhancing the onboarding process, it allows regulated institutions to streamline their KYC process and simultaneously raise the bar of financial crime risk management around the globe.

About ZignSec ZignSec offers best-ofbreed technology for digital onboarding and ID verification services. Our platform evolves constantly by aggregating the best available verification data providers within each geographic market.

Vice President: Asia

LinkedIn: sebastian-zilliacus-6a55a0 Email:


EMPOWERING BANKS AT POINT OF SPEND Paymentology is the leading issuer side payment processor behind today’s most innovative banks such as Mox Bank and Revolut.

For more information contact © Paymentology 2020

95% of banks in Asia still run on legacy technology.* Only with a next generation core, like Thought Machine’s Vault, can banks truly transform to meet the needs of a fast-changing world.

Learn more from the IDC InfoBrief: Digital Core – Now is the Time.

*IDC InfoBrief, sponsored by Thought Machine, Digital Core – Now Is the Time, 2020.